PCAOB Proposes Revised Changes to Auditor’s Reporting Model The Public Company Accounting Oversight Board voted Wednesday to propose revised changes to a standard that would modify the auditor’s reporting model to give investors more information. Ken Tysiac, JofA editorial director, discusses that the proposal comes in response to comments from the public. To read the full article in Journal of Accountancy, click: PCAOB Refines Auditor’s Reporting Model Proposal.
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Dell Inc. engaged in a management buyout (“MBO”) in October 2013 that effectively took the Company private, leaving Michael Dell in control (75% of its stock) with a financial sponsor (25% of its stock). This week, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery filed an opinion in In Re: Appraisal of Dell Inc. determining the fair value of the dissenters’ shares. This post looks to see who the “winners” and the “losers” were in the appraisal action, and in the transaction itself. Z. Christopher Mercer, Founder and CEO of Mercer Capital, explains. To read the full…
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Part 1: The Income Tax Treatment of Personal Economic Damages Awards Financial experts are frequently asked about the tax impact of damage awards, both paid and received. The complexities of the Internal Revenue Code (“IRC”) and judicial interpretations thereof make determining the taxability of receipts or payments difficult. The same is true when dealing with the taxability of economic damages awarded to plaintiffs in civil actions. Nuances in the IRC and the judicial interpretations may make it difficult for a taxpayer to determine the taxability of his or her proceeds from a litigation award of personal economic damages. Whether or…
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Could that Opinion Survive a Daubert Challenge? (Part I) This article is comprised of three parts. Part I provides background for this thought exercise and identifies the size of the hole the 76ers had to climb out of to make the playoffs. Part II will address the path an expert might take to arrive at his or her opinion. Part III will address the implications of this thought exercise on valuation-related Daubert challenges.
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Don’t Let Clients Fall into This Social Security Tax Trap Social Security recipients may face disproportionately high tax rates because of the way the IRS calculates income with respect to Social Security. So-called combined income includes adjusted gross income as well as tax-free income, half of Social Security income and some add-ons. Paul Norr, certified financial planner with Bucks County Financial Planning Group, discusses how advisers can help clients manage the tax bite in several ways. To read the full article in Financial Planning, click: Social Security: Keeping Exorbitant Tax Rates at Bay.
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U.S. Dollar’s Dominance Seen Compounding Global Debt Problem The biggest-ever burden of peacetime debt worldwide, paired with the U.S. dollar’s sustained role as the dominant currency, is raising concern about what will happen when interest rates finally rise. Mike Dolan explains that the main problem is that the dollar denominates that debt pile. To read the full article in Reuters, click: Why Being the King of Currencies has its Pitfalls.
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Using Crowdsourcing to Perfect a Business Idea Some startup businesses are using crowdsourcing services to gather input from a large number of people and test their ideas and business strategies. This can be a wise strategy, as the best ideas may come from outsiders, said Elizabeth Gerber of Northwestern University. To read the full article in The New York Times, click: Crowdsourcing to Get Ideas, and Perhaps Save Money
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While observers appear to be increasingly worried about the proliferating use of non-GAAP measures, a useful debate on non-GAAP measures would probably focus on the nature of their presentation within various disclosures rather than whether or not they should be outlawed altogether. Sujan Rajbhandary, vice president, senior member of Mercer Capital’s Financial Reporting Valuation Group, explains. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Non-GAAP Measures: The SEC Updates Interpretation of Disclosure Regulations. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To subscribe to the blog, visit: http://mercercapital.com/category/financialreportingblog/.
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Tips for Expert Witnesses (and Legal Counsel) from a Litigation Strategist Expert witnesses need to prepare, but what other factors may help the expert win-over the jury? Wendy Pearson, a seasoned litigation strategist, shares her views on this subject.
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Studies in the Closely Held Company Valuation (Part II of II) In the first part of this two-part discussion, the author identified six transaction risk factors attempting to sell a controlling (including 100 percent) interest in a closely held company. Those included: 1) an uncertain time horizon to complete the offering or sale; 2) “Make ready” accounting, legal, and other costs to prepare for and execute the offering or sale; 3) risk as to the eventual sale price; 4) uncertainty as to the form (e.g., stock or cash) of transaction sale proceeds; 5) inability to hypothecate the subject equity interest;…
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Why Clients Need to Discuss End-of-Life Care Baby boomers are at the forefront of the conversation around end-of-life planning, which should include discussing end-of-life treatments with family members and physicians, and designating health care proxies. Elizabeth O’Brien, retirement reporter, also suggests reviewing elder planning tools and resources, which includes a free consumer End of Life Guide. To read the full article in MarketWatch, click: You Need to Talk to Your Doctor About How You Want to Die
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Rate Hike Pause is Good News for Leveraged Closed-End Funds The Federal Reserve held steady on interest rates last week, not long after Fed chief Janet Yellen indicated officials would “proceed cautiously.” This could benefit leveraged closed-end funds. These funds tend to be more volatile than other financial products, Binyamin Appelbaum explains, but they may be a smart investment for people with a long-term focus. To read the full article in The New York Times, click: Fed Keeps Rates Steady and Says Labor Market Is Improving.
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How to Prepare for the Lease Accounting Standard The new lease accounting standard could have a significant impact on companies’ balance sheets after it takes effect. Chris Hatten, CPA, and Nicole Riley, CPA, with PKF Texas discuss five things companies can do to prepare. To read the full article in the Houston Business Journal, click: 5 Things to Consider Under the New Lease Accounting Standards.
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Estate of Morrissette v. Commissioner, 146 T.C. No. 11 (April 13, 2016) The Tax Court’s ruling in Morrissette is very important to the estate planning community, in that, intergenerational split-dollar life insurance arrangements have become much more popular since the IRS released its final split-dollar regulations in 2003. Yet, widespread use of this technique has been suppressed by uncertainty with respect to the tax result. Further, the IRS has oftentimes taken the position (in audits) that a lump sum premium payment should be treated as a gift to the lower generation even if the economic benefit regime was used to…
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Five Proven Strategies to Generate High Growth In this article, Hinge Marketing focuses on organic growth and five proven strategies for generating it.
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Six Transaction Risks Owners Face Selling a Company that May Explain DLOM (Part I of II) In this first of a two-part article, Robert Reilly reviews the various models analysts use to estimate the DLOM and factors analysts consider in the DLOM selection. Valuation analysts often value closely held companies for transaction, taxation, financing, accounting, litigation, and other purposes. Depending on: 1) the business valuation approaches and methods applied, and 2) the benchmark valuation data used, the analyst may initially conclude the value of the closely held company on a marketable (as if traded on a stock exchange) basis. In…
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Advising Your Business-Owner Clients on Transitions As baby boomer entrepreneurs move toward retirement, their advisers should ask a series of questions about their financial and emotional states to help them plan their exit strategies. Patricia M. Annino, JD, suggests, among other things, advisers should ask about how quickly clients want to sell, how the sale will affect their families, and whether they want to keep working in the business after the deal is finalized. To read the full article in the Journal of Accountancy, click: Key Questions to Ask the Family Business Owner who Plans to Sell.
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Federal Agencies Face New Disclosure Requirements for Public-Private Partnerships Federal agencies will be required to present disclosures about public-private partnerships in their general-purpose financial statements under guidance issued by the Federal Accounting Standards Advisory Board. Ken Tysiac, JofA editorial director, discusses the standard. To read the full article in the Journal of Accountancy, click: New Guidance Issued for Federal Public-Private Partnership Disclosures.
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The debate over the use of non-GAAP performance measures continues. Even as the prevalence of these items grows in the financial reports of public companies, cautionary tales of the uses and abuses of such metrics garner headlines. Lucas M. Parris, senior member of Mercer Capital’s Financial Reporting Valuation Group, explains. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Non-GAAP Measures: Here to Stay? This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To subscribe to the blog, visit: http://mercercapital.com/category/financialreportingblog/.
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Electronic Communication can be Fraught with Peril for the Unwary CPA Electronic communication can be fraught with peril for the unwary professional. CPAs who become over-reliant on this form of communication confront increased professional liability risk. This column explores some of the more common risks CPAs may encounter with electronic communication and discusses how a professional can make appropriate use of the media while avoiding potential liability exposure.